New NSW strata laws on the horizon

By Dr. Adrian Carr (Corporate Licensee-In-Charge, PICA Group)

The strata community and building industry are on the cusp of legislative change. Let’s look at what strata matters are on the government’s radar and how the New South Wales Government elections could influence strata living.

Prior to the state election, a number of proposed legislative reforms were put on hold, but that could change with the Liberal government.

Since the strata community has been pressing for some of those proposed legislative reforms, various draft changes to strata-related legislation have commenced over the last few years. Let’s look at the six top areas that may see some traction after the elections:

Strata legislation

The Liberal government had sought feedback from the strata community to identify any unintended consequences that had emerged from the operation of the new strata legislation.

In response, PICA Group identified 40 unintended consequences and contradictions in the legislation. It remains to be seen if and how the election results may address various long-standing issues around strata community living.

Community legislation

In June 2006, a discussion paper was released on reforms to the community legislation. Then, in September 2014 a position paper was released for public comment in which some 58 reforms to the legislation were proposed.

These reforms were shelved, pending the development of the new strata legislation. It was intended to align the community legislation with the new strata legislation as there are contradictions between the two forms of legislation.

These reforms are largely dependent on how the strata legislation may take shape after the elections.

Short-term holiday letting

The Liberal government proposed a framework to control Airbnb-type short-term holiday letting practices in the state. However, the Act that contained this framework has not been proclaimed and will most likely not be proclaimed until an accompanying set of regulations have been developed.

The regulations that were being developed by the Liberal government intended to include a “Code of Conduct” for property owners offering short-term letting. This legislation has proved divisive within the political parties and the strata community, but the need for certainty remains.

On the other hand, the Labor government have proposed that property owners register their property in a move to regulate the trend. However, the strata legislation needs to be finalised to make the various components of strata living clearer.

Licensing of strata managers

The legislation that regulates the licensing of strata managers was set to be reformed prior to the election. Consultations with key stakeholders in the strata industry were held in 2018 and it is expected that an incoming government will revive this reform agenda.

This may affect how strata professionals and service providers engage with owners corporations and help build deeper trust within the strata community.

Cladding

In the face of growing political pressure to do something about the issue of cladding, legislation has recently been put in place.

Strata properties that have flammable cladding have been required to register their buildings, but the cost of remediation is to be borne by the affected strata properties.

Some strata properties have joined a class action to seek compensation from the manufacturers. So, there is significant legal and political pressure for further legislative action in this space.

Building compliance

Considerable outrage has been expressed to the government regarding the lack of accountability associated with the construction of new buildings.

The Liberal government had introduced certain measures such as the 2% building bond and warranty scheme. According to this scheme, property developers are required to set aside 2% of the building cost before beginning work to cover any defects that may be found after inspection.

However, it remains to be seen if this measure is adequate and if it can benefit the strata industry. At the same time, there is also a need to revisit the role of inspectors and certifiers to ensure they’re unbiased and have no conflict of interest with the building.

Following the Opal Tower case, the Liberal government plans to hold inspector and certifiers accountable for defects that may be found in the building after completion. They also plan to conduct more frequent audits on buildings in the state to ensure compliance is always prioritised.

This may not be a comprehensive list of what legislative reforms are outstanding or a confirmation of government plans. However, it points to certain key reforms the strata community can expect, and what components of a legislative reform program an incoming government will need to address.

Note: PICA Group does not support the interests of or promote any political party. This content is based on information and actions taken by political stakeholders in relation to the strata industry.

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